The Swier Law Firm Estate Planning and Probate Law FAQs

Gifts exceeding the annual gift tax exclusion can fall under the lifetime estate and gift tax exemption, but you must file a timely gift tax return. For example, if one of your children is having financial issues, you should first maximize your annual exclusion and then apply gift amounts over that limit against the lifetime exemption.

The lifetime exemption is $11.4 million for 2019. Before the Tax Cuts and Jobs Act (TCJA), the limit was $5.49 million in 2017. Unless made “permanent,” the current exemption amount will expire at the end of 2025 and the exemption could go back to the pre-TCJA limit.

The IRS combines the estate and gift tax exemption for a total exemption of $11.4 million. In other words, if you do not use any of the gift tax exemption while you are alive and you die in 2019, your estate will have the full $11.4 million estate tax exemption. If you use $4 million of the gift tax exemption while you are alive and you die in 2019, your estate will have a $7.4 estate tax exemption remaining. In this way, the federal estate and gift tax exemption is considered to be a “unified” tax.

Do You Need To Speak With A Lawyer About Estate Planning?

If you need to speak with an experienced estate planning lawyer please contact us online or call our office directly at 888.864.9981. We will be happy to discuss your legal options!

When clients set up generational wealth to pass directly to their heirs, and those assets are commingled with spousal assets or used to buy marital property, they may become fair game in later divorce proceedings.

Solution: Explore Dynasty Trusts

Families do not have to rely on prenuptial agreements to protect assets. A less emotionally charged way to shelter generational wealth is to plan its transfer using a dynasty trust with a corporate fiduciary. This way, assets intended for multigenerational use are not lost in a divorce.

Corporate fiduciaries often serve as objective and experienced trustees to help protect trust assets for the benefit of successive generations.

A collaborative team of seasoned experts can help make sound action plans. These plans can protect family wealth and make sure its transfer does not rely on the success of any current or future marriage.

Married couples often consider themselves one unit with their spouse. It doesn’t seem to make sense that separate revocable trusts would be set up as part of an estate plan. But what most people don’t really understand or want to consider is that the real benefit to having a revocable trust happens after death. After the death of the first spouse one spouse still remains. There is no longer a marital unit and any trusts you have must reflect that.

A portion of the assets that are attributed to the deceased spouse must become irrevocable and a portion must stay revocable. This is where things get confusing, time consuming, and potentially very costly if the assets were not split into separate trusts while both spouses were alive. Ultimately, the surviving spouse will be stuck dealing with the mess and cost.

Here are two disadvantages of having separate revocable trusts:

• With separate revocable trusts, each spouse will have their own trust and would essentially be responsible for the management of their own trust.  But spouses can share this responsibility by making each other co-trustees of their respective trusts.
• Formation and proper funding of separate revocable trusts require slightly more upfront cost and a bit more work to fund separately.

Do You Need To Speak With A Lawyer About Estate Planning?

If you need to speak with an experienced estate planning lawyer please contact us online or call our office directly at 888.864.9981. We will be happy to discuss your legal options!

What Does Will Contest Mean In Estate Planning?

This does not determine who has the best Will, it is a process through which someone files a formal objection to a Will.  The objection could be for any number of reasons, but the objection must be filed with and heard by the probate court of the county where probate of the Will is taking place.

Example Of Contest In Regards To Estate Planning

My uncle filed an objection to my grandma’s will.  He says she wasn’t competent when she wrote him out and didn’t know what she was doing.  Dad is mad that her estate needs to be slowed down and pay money to fight a will contest.

What Do Wills Mean In Estate Planning?

A written document that contains instructions for the disposal of assets at a person’s death.  This is filed and enforced through a probate process, sometimes involving the probate court.  Laws vary by state.

 

Holographic Will

A will that is partially or fully handwritten.  Not all states recognize holographic wills.

 

Pour-over Will

Used together with a revocable trust to “pour” any assets that were not in a decedent’s trust at the time of death over to the trust.

Example Of Wills In Regards To Estate Planning

My dad signed a will that excluded my brother, left me only part of his estate and left a ton to charity.  I’m sad I didn’t get more, but I’m glad he was able to exclude people he had problems with and give to a charity he loved.

What Does Unified Credit, Estate Tax Exemption, Combined Estate and Gift Tax Exemption Mean In Estate Planning?

The amount each person is allowed to deduct from any federal estate tax that may be due after death or for gifts given during lifetime (above the annual gift tax exclusion amount).  In 2019 this amount is $11.4 Million.  Current rough calculations of American assets show that more than 99% will never pay an estate tax at these levels, especially with estate tax portability.

 

What Is Estate Tax Portability?

Estate Tax Portability can be used by a married couple to shield $22.8 Million dollars from federal estate and gift tax.

Example Of Unified Credit, Estate Tax Exemption, Combined Estate and Gift Tax Exemption In Regards To Estate Planning

My dad used 2 Million of his estate tax exemption amount during his life and at his death.  My mom elected portability of the remaining 9.58 Million dollars so she can now shelter 21.16 Million dollars from gift tax during her lifetime or estate tax at her death. (11.58 + 9.58 = 21.16)

What Does Trustee Mean In Estate Planning?

Person or institution that will manage assets, distribute assets and take care of administrative matters of the trust according to the terms of the document.

Example Of Trustee In Regards To Estate Planning

My brother was serving as the trustee of my dad’s trust after he died, but he recently named our local bank to serve in that position because the job was too much for him.

What Does Assigns Mean In Estate Planning?

An institution specializing in the management of trusts.  Sometimes these are trusts of a specific family and other trust companies will manage any trusts.  There are lots of trust companies in South Dakota because of the favorable trust laws of the state.  They serve as a corporate trustee and can have roles ranging from specific to general.

Example Of Assigns In Regards To Estate Planning

I have named by children and my favorite niece as the assigns of my estate.  If they survive me they will split my estate equally.

What Does Successor Mean In Estate Planning?

Someone who follows. These people are named to serve in a position; executor/personal administrator, power of attorney, trustee etc. as a back-up if the first person named is unable or unwilling to serve. 

Example Of Successor In Regards To Estate Planning

My mom named by dad as the Personal Representative of her estate but he dies years ago so I am serving as the named successor.